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tv   Your Money  CNN  August 1, 2010 3:00pm-4:00pm EDT

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>> it's kind of nice that we stayed together, and even though this happened, my dad has stayed strong and did his share of work, and my brother and my sister. >> it could have been worse. our family unit here in this house is five people, and within an instant, it could have been two. >> alternatively, i think it's a very good experience that made us so close. >> we're not 100 maersk y% yet,e getting there. >> if i need anything, they're there. i couldn't ask for a better family. >> and "your money" starts right now. is there more pain to come before this economy gets better? welcome to "your money." i'm ali velshi. christina is off this week. consumer confidence is sinking, businesses are holding back on hiring, indicating to some people that the worst is yet to
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come. diane swanson, let's talk about this. the fear seems to be gripping the economy. it's not a same fear we had a year and a half ago, it's a different fear that we're not going to emerge from this bad economy as strongly as we had hoped. that's holding people back from buying things, holding people back from investing and hiring people. do you think these fears are legitimate, and if not, what can we do to get past it? >> the fears are legitimate. the economy feels like it's growing so slowly that it's kind of like being stuck in a traffic jam. you move guaforward, but every e you move forward, you don't know if there is an accident or road work up ahead. hiring has not picked up as many as people hoped it would and unemployment remains extremely high. on the business side of it, business is picking up. we've seen businesses pick up
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double digits in the second quarter. the double-edged sword to that, of course, is we're seeing consumers not get jobs from that, because as capital investment picks up, initially that boosts productivity growth, but it means you can do more with what you've got. you don't have to hire a lot of people. over time we know the rebounding profits will add to hiring, but it's been a very slow process. >> justin walters is a professor of business and public policy at the wharton school of the university of pennsylvania. i'm sure people ask you all the time, is the economy getting better, is it getting worse? this is gp growth in the last six quarters. you can see the pattern went from bad to better and then the last couple quarters, we're growing. we're above the zero line but we're not growing by much. the question i get asked a lot is what does the average person have to do with the gdp? it's the biggest measure of our economy. is it relevant to whether or not we've got a good, strong
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economy? is it relevant to these fears i was just talking to diane about? >> absolutely it's relevant. they are averaging the economy. when you look at things that make people happy, you try and look at which economic indicators correlate with their well-being, gdp really helps. the really big one that matters to people is unemployment. when unemployment rates are high, or when you in particular are unemployed, you're having a pretty tough time with things. that speaks to how the gdp can be growing or the economy speaks to how things are better. things are still pretty grim and that's because unemployment is high and it remains high. >> we are in an election cycle, there's no question about this. this comes up a lot, people accusing an administration of not doing the right things to generate business, to generate those jobs, and many of those jobs are created when people, as you said, justin, decide that they're confident enough to start spending their own money.
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so, diane, what has to happen? what has to give to make it feel like a growing economy? what has to happen to make people feel like they'll have a job and that their money is well spent and to start creating jobs in a virtuous cycle? >> well, you know, that's conditioningly t exactly the problem is jobs. we have a hid wiead wind in the days of summer as state and local governments begin to do their budget kulcuts, we see jo growth going in a negative direction. even as private payroll picked up, the loss of government jobs actually sapped the net job growth in the u.s. economy. i think the hard reality is that as much as all that we did during the 2008 and early 2009 to stimulate, to stem the blood letting, it stopped the losses that we felt in the u.s. economy and did trigger recovery, but the problem is it's not enough. and the economy is not growing fast enough. the pace at which we grow is
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really poimportant because it's not growing enough and fast enough to generate enough jobs to have people feel good about it. i think we'll see hiring pick up in the fall, but it will sftill be a very long slog with unemployment. it's also been a long period of unkbchemploymen unemployment. the duration is very long, and the sense that you're losing your skills, you're not able to get back into the labor force and anxiety rises the longer you're out of the labor force as well. >> we just saw some numbers. consumer confidence decreased in july, the numbers showed a decline because of heightened concerns about personal financial prospects as well as about the overall economic outlook. i want to skurks jask you, just been a tough time we've gone through. it seems a lot better than it was at the end of 2008 and even the end of 2009. still, there is this benign recovery, people aren't really
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buying into it, they're not really sure about it. what do you think the next decade looks like because if you tell me it looks good, i might start making decisions about investing or spending or hiring people. >> there are two types of recoveries that you see out there in the world. usually for the u.s. economy in particular, when things get bad, the economy snaps back to where it was before the recession, and bad recessions are usually followed by really robust recoveries. so the optimistic economist out there has sort of been hoping that the past in the u.s. is a really good guide to the future. there is a pessimism -- i think i'm one of the pessimists and it sounds like diane might be, too -- who worry that this recession is different. and this recession is different because a lot of the unemployed are long-term unemployed. they're losing skills, they're losing touch in the labor market and they're losing hope. as that happens, they become disenfranchised with one of the most important parts of our economy and with society and when the groelt returns, they may not be ready to take those
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jobs. this is what we saw in europe in the late 1990s. a lot of long-term unemployed so the unemployment rates remained very high for a decade, even after a serious recession. so i think the key to getting the next decade right is getting the long-term unemployed back to work. >> that's going to be the goal, that's going to be the discussion going on throughout the election, that's what you're going to be hearing through the administration and everyone else who is running for reelection. we'll talk to you both again. thank you both for joining us giving us your sense of what the future will look like. diane showed us as well as justin the future. if you thought the wealthy americans would be paying more in taxes, think again. we'll show you why a tax hike might be on the way for almost everyone. you know, when i grow up,
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neutrogena clinical skincare is clinically tested to undo the look of a year's worth of skin aging in just 4 weeks. do-overs do exist. [ female announcer ] new clinical skincare. neutrogena. #1 dermatologist recommended brand. on the campaign trail in 2008, president obama said no family making less than $250,000 would see any form of a tax increase. unless congress does something soon, that will not hold true because the federal tax cuts are scheduled to expire at the end of this year.
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alan chernoff explains how this could have an effect on virtually all of us. >> whee! >> the chadducks of ramsey, new jersey like to enjoy their money. >> we're definitely spenders. we like to have a good time, enjoy life. >> even though chris and his wife dawn have stable jobs, they're prepared to tighten their belt. he figures he will need an extra $350 a month to pay more federal taxes. >> where would that come from? maybe not go out to eat as much, maybe bringing my lunch to work. >> brace yourself. there is a very good chance your family also may have to soon face the same tough choices to find extra money to pay uncle sam. tax rates are scheduled to rise once the year ends. that's because tax cuts that president george w. bush championed in 2001 and 2003 were put in place only through the end of the decade. >> if congress does nothing, it
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could lead to one of the largest tax increases in american history. >> president obama pledged to let taxes rise only on families earning more than $250,000 per year. but as things stand right now, tens of millions of americans who earn less are about to get whacked by new, higher tax rates. >> if a new tax legislation is not implemented, it would be a dramatic effect to the middle clals. >> middle class tax rates are scheduled to go up by 3%. for the chadduckses who earn just over $175,000, the change will put them in the 1% tax bracket, up 30% from today. also due to change, the tax credit middle and low income families get for each child would be cut in half, to a maximum of no more than $500 per child. and taxes would rise on dividends and capital gains, especially hurtful to retired americans. >> thank you! >> in planning to let taxes
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rise, president obama hopes to chop the budget deficit. but if families like the chad ducks cut off spending by $350 a month, that might hurt the economy. it could derail the recovery. and if that happens, some experts argue, it could mean lower overall tax revenues for the treasury. there is some hope for the middle class. senate finance chairman maximum bacchus supports making the tax cuts for middle class families permanent. on the house side, democrats also say they want to give relief to the middle class. so there is a chance couples earning less than $250,000 a year will be spared, which is exactly what president obama has pledged. but for those earning more than $250,000? rates are most certain to rise. >> so at the end of your story there, alan, you hit on something very important. that is if that family there ends up paying $350 more a month
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in taxes that's possibly money they would have spent somewhere else that would have helped the economy out. but as you said, someone, maybe wealthy americans, are going to see a tax hike. with this uncertain economy we're in right now, we just saw gdp come in lower than we expected it to come in, we saw consumer confidence come in lower than expected in july. what does a tax hike, whether it's on just the wealthy or on the broader middle class, do to the struggling economy. >> ali, it's a major risk, there's no question about that. because the consumer does fuel the economy, and as you accurately point out right now, the consumer is not feeling all that good. confidence is pretty low, consumer spending has not been driving this economy. it's more business spending that's been holding things up. so if the consumer is whacked some more, you pull back. you get that a little bit less in the equation in terms of the economic growth. it's a real risk but washington needs to also deal with that budget deficit.
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>> and that's a good place to bring in gloria borger. the president not getting good marks with the economy. he's two years in. basically people think it's largely your problem. they don't blame president obama for the position he's in, we're talking about whether he's handling it the right way. this is a big, big challenge for us going into a mid-term election because you're going to have this administration try and say, this is not our problem, and you'll have republicans saying it's totally your problem. >> right, and they have to figure out what to do because as alan was just pointing out, these tax cuts expire january 1. i remember when they voted in these tax cuts. remember that thing called budget surpluses, and george bush was telling people, we want to give you your money back? but even congress understood that at some point, that could cause a deficit problem. so you have the president right now, you have the treasury secretary right now, the speaker
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of the house all saying if you're a family earning $250,000 or less, you're going to keep your tax cuts. and you have some moderate democrats joining with republicans and saying what alan was talking about, which is this is not the time to raise anyone's taxes in the recession, even on the top 3% of wage earners in this country. however, you do have a bunch of economists who say that those people will continue to spend even if they do get an increase to 39.6%, which just, by the way, returns the wealthy's tax rate to where it was during the clinton years. >> ali, gloria, there is another aspect to this as well, because the wealthy are going to get hit, as we mentioned, on the dividend side of things, on the capital gains as well. after all, it is primarily the wealthy who are the folks who own stocks. so these tax increases make investing in stocks less
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attractive, and we also do need to rebuild confidence in the stock market. >> exactly, alan. you did say it's businesses that might be spending now, and this is where our worlds clyde. there is a world that says don't help business out at the expense of people, particularly since look at what big business did to get us into this mess. but as we know, alan, without bi business investing, without americans investing, our consumerism is down. they get jobs and then they spend. how do you square the circle? alan, let's start with you. >> you have to look first at the short term and the long term. long term, we do need to reduce our deficit. we have a risk long term that interest rates could shoot up because of these deficits we're running. right now the economy is still fairly weak, interest rates are extremely low, so that is not a problem. so a lot of economists would argue, look, you've got to still prime the pump. you've got to get money into the
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economy. wrong time for a tax increase. >> well, you know, the president is talking about help for small businesses, for example, to offset this, but if we were to extend all of these tax cuts right now, it would be $2 trillion added to the deficit. by the way, we have a deficit commission which is supposed to report december 1st. there are some folks who are saying, gee, maybe they'll kick the can down the road a little bit and let the deficit commission deal with this, or maybe they'll deal with it in a lame duck session. however, that would really be advocating their responsibility right now. not that it's not beyond them, but this is an issue they're just going to have to deal with, and the democrats are going to say, you got to think about the deficit here, and they're going to say republicans are hypocrites if they don't. >> it's a tough one because neither higher taxes nor higher
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debt is a good thing. good to see you both. financial reform, that bill went into law. our next guest says it might be the best law money can buy. he'll explain to you what that means when we come back.
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-so you're thinking...? i agree. preferred. only meineke has options... and now 50% off brake pads and shoes. my money. my choice. my meineke. one major criticism of the recent financial reform law, the role that the massive wall street lobby played in drafting the final bill. >> you know, goldman sachs and wall street people wanted this bill passed. and if it's such a change of environment for wall street, why would wall street be backing it? >> good question. steven brill is a long-time journalist, co-ceo of journalism on line joins me now. he says this is the best bill money can buy. you think the lobbyists got their way in large part. >> in large part, they did. i disagree with the senator.
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i think if they had their way, really, they would prefer nothing be passed. there really isn't any question there is some significant reforms here, but at the edges, at the margins, lobbyists were able to do what lobbyists can do, which is get a slight change in wording here, a paragraph inserted there, a change in a sentence here that adds up to billions of dollars worth of change for the interests that we're able to pay all these lobbyists to try to go get that change. >> some will argue, lobbyists will argue, and they're on all sides of an issue, they will say they were the ones that helped form this legislation, this isn't unique to this legislation because they're aware the rubber meets the road so they guide the legislators and their staffs into this doesn't work but this does. how much of this is necessary lobbying and how much is undue influence? >> it's a combination of both,
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but they're definitely right in the sense that if you're in the xyz industry and a deal is being passed to regulate your industry, you obviously will know the most about how that bill and how little nuances in the bill will affect your industry and may have unintended consequences. so really good members of congress were telling me that they will use lobbyists as a sounding board and say, what about this, what about that, ndk they will try to play it off people who are on the other side and have lobbyists. the problem here is the scale really isn't well balanced. the people representing the big banks and the other big interests have many more lobbyists who are very skilled and they can sort of outweigh the voice of, let's say, the consumer advocates. that's the system we bargain for when we passed the first amendment. >> and some pieces of legislation, it is more balanced. you've got people on both sides perhaps lobbying equally or
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spending similar amounts of money. in this case, that's not the case. >> there were some instances. for example, the fight over the limited fund, what the banks could charge merchants for debit card users. the merchants were the big box stores like walmart and staples, and the lobbyists thought that was a pretty fair fight. >> let's talk about the chamber of commerce, which has spent a lot of money lobbying for business interests and opposing a lot of what this administration has done. they spent $144.5 million lobbying business interests, and yet a lot of things they didn't want in this financial reform bill made it in. does that tell you that despite all this lobbying effort, there is just some stuff that still works in wash sfwhaington? >> when the public pays attention and the public cares, members of congress will pay attention to that. the only thing members of congress care more about than donations to their campaigns are votes.
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so that if the public is paying attention, if it's a high-visibility issue, the role of lobbyist will go down. by the same token, when it's no longer a high-visibility issue, the role of lobbyists will go up. and now what we're going to see, now that the regulations for all this stuff have to be written and these are, you know, thousands of pages of unintelligible regulation, there's not going to be a lot of visibility on that, and the lobbyists will have lots of influence and ilt's going to be up to the press to pay attention on behalf of the public. >> you bring up a good point. i'll reuse my cliche, where the rubber meets the road, and this is actually going to become now where those regulations are written. if we all go away from this thing, it could be just the lobbyists left in the road with the tax increases. >> the rest of the stuff is so arcane and so boring and so meaningless to all of us except for the people who it means millions of dollars. or billions of dollars.
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>> i want to ask you one thing. goldman sachs settling with the sec for a billion dollars, citigroup says it will pay $75 million to settle charges in prime mortgages. steven, do you get a sense of these penalty when they sound huge in the case of goldman sachs, biggest settlement ever in the sec. i hear people saying this isn't enough money to make any of them change the way they do business. >> the amount of money might not be enough but we can hope the embarrassment of the case might be something. but i haven't read all the detail of the sec case against go goldman, so i certainly don't know as much about it as i should. >> thanks nor cofor coming on a talking to us about the ceo of journalism on line. immigration, another topic we're talking about it a lot. we're going to try to strip away
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race and politics, imagine that. we're going to try to strip away race and politics from the immigration discussion and reveal exactly what immigration policy would best suit this country and this economy. you talk to these guys. they go through every car and truck we make with a big fat red pencil. because they know a family's going to be inside. a teenager. a guy on the way to the job. the engineers of chevrolet. just another reason why we can offer a 5-year 100,000 mile powertrain warranty. and another reason why a chevy's a chevy.
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ston r. if you eliminate race and politics if the skrdiscriminati and race battle, you may find you get reform that is best for our economy. she is the economist at the federal reserve bank of dallas and the author of "beside the golden door." p pia, let's talk about this for a second. immigration is such a dynamic thing in terms of the economy. immigration policy might be the least dynamic part of our entire government. strictly in terms of the economy that we have here in the united states, where do we get it right on immigration policy, where do we get it wrong? >> well, we get several things right on immigration policy.
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we do what we can to bring in high-skilled workers in particular. one way we do it is through the green card policeman. t -- program. the problem with the green card program is about 85% of these visas go to family-based and humanitarian immigrants and only 15% go to work-based immigrants. furthermore, of the 15% that go to employment-based, only half go to workers and the rest go to dependents. so we have a short shift in independent immigration. >> richard is the host of "america means business." while many will tell you this is a typical american problem, it really is not. most countries have the very debate that's going on in the united states to some degree or another. do you get a sense in all your travels that some places get it right in terms of immigration policy, the kind that actually supports their dynamic
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economies. >> not really, because of the discrepancy between just as you were talking about, between the highly skilled and, if you like, the manual labor that's needed to basically run many economies. and it's exactly the same in the european union. where there has been a huge migration of workers from the new eastern countries of the eu into the western countries. some would describe that as pure and simple economic migration. what they call some campaigns the polish plumbers who moved west. even now here in the u.k., at the moment there is a plan going through the government to tap the number of non-eu immigrants allowed into britain. within the european union, everyone is allowed to move anywhere. >> right, but what the government in britain wants to do is put a ceiling, a number of non-eu immigrants. what that's doing, ali, is
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distinguishing because companies are squealing in britain. today they are complaining there are not enough high-grade, high-quality visas necessary. >> pete, i'm going to ask you this. here in the united states, you have people in both extremes. you've worked in this, you've specialized in this, you've worked in the administration. one extreme says we don't do well, we don't bring in the high-skilled labor that we need. another one says we give too many visas out and we bring too many people into this country. what is the truth in this country? how much immigration do we need? >> the truth is that let's start with how we bring immigrants in. take, for example, our h 1 b program. we try to compensate for the fact that we allocate very few green cards by bringing high school workers in on temporary visas. but when these workers decide they want to stay permanently and apply fr a green card, they still run into a quota and they're stuck in long lines.
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right now there is a long line of green cards in the queue which will take ten years to cure if there is no action. >> i hope people read your book because it's very hard to get past the hyperbole and understand exactly what is behind the administration. pia is t richards is the author of "behind the golden door." stay there, we'll be right back. morality versus money. we're looking at what america is willing to legalize to fill the budget gaps after this. ♪ band: how many credit cards ♪ is too many credit cards? ♪ he's guessing seven cards probably are ♪ ♪ 'cause now his credit score s seriously poor ♪ ♪ he won't be able to afford a house or car ♪ ♪ so he's working for the man ♪ to pay off all he can ♪ and to see how he's doing ♪ this is the site he's using: ♪ free-credit-score-dot-com! free-credit-score-dot-com! ♪
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i'm back with richard quest, host of cnn international's "quest means business," and a stand up with richard dominic. bp made the change that everybody expected. they replaced ceo tony hayward or at least say he'll be replaced by october.
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hayward told the wall street journal, quote, i became a villain for doing the right thing. pr blunders like these. take a listen. >> this wasn't an accident. this was a drilling rig operated by another company. it was their people, their systems, their processes. we are responsible not for the actions. i think the environmental actions have been very, very i am modest. >> nobody wants to settled as much as i do. i want my life back. >> start with richard. richard, tony hayward. incompetent or a victim of really bad pr training? >> certainly not incompetent in the sense that from day one, bp has always said it will clean up the mess, it will take care of those people involved. no, complete and utter disaster when it came to pr. when you think of the number of pr people that bp must employ,
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and you really have to question whether or not they are worth their money or not. it's a difficult one, but i do think there will be change now. bob dudley right from the get-go he has put his finger on the pulse. and you know something, ali? it doesn't matter which way you look at it, you have to do the i feel your pain. if you don't do the i feel your pain, you come up as uncaring capitalism. >> like you say, bob dudley, the new incoming ceo, first american to run a big british company like bp, i'm not sure he -- >> don't get so hung up on the nationality of the people involved. in the incompete competence of things were handled. >> we're not talking soccer. listening to tony hayward
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complain and saying do the i feel your pain, first of all, you could say i fieel your pain nobody believes it. this company was started at the time of corrupt social measures. it falls on him and all these other oil companies. all these other oil companies didn't spend one dime invest ng a cleanup technology and you can argue that certainly has affected their bottom line of profitability. we see they're in pretty bad shape. >> get off your high horse, because the fact of the matter is, as long as americans continue to want and demand the very cheapest in fuel and are not prepared to invest in the clean technologies, the higher taxes necessary, they want to drive big gas-guzzling vehicles, you're going to end up with profit first. >> no problem there. you're right on that one. that one gets us into trouble all the time because everybody wants some very discreet entity
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to blame, but the reality is nobody goes and digs in a mile of water for the fun of it, they dig in it because we buy everything that they actually produce out of the ocean. >> listen, tony hayward saying he got demonized is offensive to actual demons. i agree with richard. americans need to stop buying all the bottled water and everything else we do that contributes to our problem. we are very, very greedy here. we are 5% of the population, 25% of the energy. it's ridiculous. >> let's talk about being greedy, let's talk about gambling. the federal government here in the united states banned internet gambling in 2006. you might say one economic meltdown later, everybody could really use the tax dollars that are associated with legalized gambling. you legalize gambling, you legalize taxes, so congress is considering legalizing taxes and poker and other on-line betting.
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we look to tax everything and morality tends to lose out on money. is it a good idea? >> i think so. i don't promote gambling. i think it's grotesque, especially if you're a parent. but the bottom line is, if you have a checking account and an internet connection, you can go on line. they say they might as well tax it. they want to put it in the education system. if my daughter gets an extra computer so some old lady can smoke her cigarettes, drink her free liquor and spend her last security check on the slots or on line, i'm fine with that. >> richard, you said get off your high horse a few minutes ago, so we're getting off our high horse. if you have to gamble, give us our cut. >> stop the hypocrisy, first of all, the country that has las
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vegas and has demonized executives who can even go to the united states without risking arrest, and i've met some of them, and they will tell you that. so it makes common sense. you know something? perhaps the amazing thing is it took a financial crisis for a bit of dose of reality. >> very good, gentlemen. we look forward to more conversations with both of you. richard, you're a regular. pete, great to see you, love the haircut. hope to talk to both of you again soon. how trustworthy is your financial adviser or broker protecting your money from financial con artist? you're going to want to listen to this. stay with us.
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you have heard of the biggest names, bernie madoff, charles ponzi. people are around scheming people like you and me, even though we may not hear about it in the headlines. he writes a book. tom and i go back a long way. we worked together for many years. i read the book before it went to print and gave him an
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endorsement of the book. tom, you cover everyone from ponzi to madoff, but a whole bunch people haven't heard of. you've even been involved in some of those cases as a securities lawyer. how common is financial swi swindling? >> ali, it's very common. and the sad thing about it is it's common in relationships of trust and longstanding reels shi -- relation shipgs. what we found was how many people are swindled by investment brokers they've known 10, 20 years or longer, how often they're swindled by family members, even. >> there are similarities in the stories in your book, and by reading it you become familiar with techniques these con artists have in common. who is most vulnerable and most likely to get scammed by a con artist? >> i think anybody who has lost money in the last few years is extremely vulnerable, and that's what we find. that's a lot of people.
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what we find is when you've lost money, you become desperate to earn your money back. especially if you're close to retirement, you say, wait, i'm down 20%, 30%, what am i going to do? and the scam artists know it and move in on you. the second group of people that are extremely vulnerable are people who are getting older, who are elderly. what happens is, you start to lose maybe some of your p perceptive abilities, you live alone, they don't have family nearby and they become vulnerable to people who try to win their trust. and finally, people who are going through periods of grief. we call them the bereaved. if you have a family member that just passed away, if your spouse has died, of course you're not all together emotionally or stable because of what you've just gone through, and the scam artists know that and they prey on these people. >> so if you know somebody who is recently bereaved or somebody who is growing older, try to
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stay involved with having them talk to you about what is going on in their lives and who is trying to invest for them. tell me about the strategy thes scam average people. >> well, the first thing is these are very false, emotional bonds they will try to create. they will come in and tell you things like, hey, i've known your father all these years or, hey, you and i go back ages, back to high school. remember when we used to do this and this. don't you remember when we used to sit next to each other in church. they'll try these emotional bonds, which often work. then they'll move in with promises of very good returns. say you can maybe double your money or you might get 15% return a year in a market like right now where interest rates are extremely low, so that's very suspicious. >> one of the things that was interesting in your book is this people -- and madoff did this and ponzi did this. this idea that i have a new way of investing. the old way doesn't work, even though everybody else can't get you more than 10% in the market, i've got a way that hasn't been
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discovered. >> that's what we call this idea of the new paradigm, the new economy. going back to the late 1990s and into the 2000s we heard that a lot with certain types of tech stocks. remember the pet.com company and things like this. investors would say, wait a second, here's a company that's not making money or how could it be doing this. the response is don't worry, this is a new economy we're in now, this is a new theory, this is a new product. so these types of things will often hook investors. >> great book worth reading. co-authored by tom ajamie. thank you, tom. building up mississippi by singing and playing the blues. we'll have that story and a very surprising look at tom foreman coming up next. you do not want to miss this. ????????????????????????????????
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first, hurricane katrina, then the recession hit, now the oil spill. the gulf coast has taken quite a beating. but in mississippi, things are looking a little bit better,
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thanks to the blues. tom foreman recently visited the delta on the cnn express and he joins me now from washington with his guitar. tom? >> reporter: it was like a pilgrimage, ali, i have to tell you. what's happening in the northern and western part of mississippi, over in the delta we've all heard so much about, is really unbelievable right now because they know their state is in trouble and yet they're having an enormous surge in building up their part of america, and they're doing it by reaching back into their past. take a look. any time, any day, you can hear blues in the delta. this is the land of legends, muddy waters, b.b. king. ♪ >> and it's home to their musical heirs, like terry "big t" williams.
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>> i don't care if it's a fast-played blues or a slow-played blues, it's still saying something about i'm feeling bad but still life is okay. >> reporter: and lately, life has been more than okay here, even in the wake of the oil spill, katrina and all the economic turmoil because of a rising tide of blues tourism. at the delta blues museum, the crowds are growing so steadily with people from every state and dozens of foreign countries, that it will soon be expanded to more than twice its size. this town alone pulled in $54 million from visitors last year. people tracing the history of blues and rock through a string of historic sites throughout the region, called the blues trail. cappy allen is with the county tourism commission. >> this year so far we've seen an increase of 13% in our tourism tax numbers. >> reporter: and all of that in
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the middle of a recession? >> absolutely. we are open for business. >> reporter: some say the surge is because the blues speak to folks in hard times. some say it's because people here are doing a better job marketing their attractions. but bill luckett an owner of the ground zero blues club says whatever the cause, the results are undeniable. how important do you think that is to building up this part of america in these hard times? >> well, we have lost a lot of our factory, a lot of our base manufacturingwise. blues music and tourism and interest in blues music is replacing that as an industry. >> reporter: according to lore, robert johnson met the devil at this crossroads and traded his soul for the gift of music. that's just a legend, but this is a fact. >> the tourist attraction used to be seasonal. now it's year-round. they come all the time now. >> reporter: and in the wake of so many problems for many folks,
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that feels heaven sent. you know, they know that the southern part of their state is hurting right now, ali, and they also know that the coast has given so much to the whole state, they really feel up there this is a time for them to give back by being strong and building up while the coast tries to recover from all those problems you named earlier, ali. >> tom, given your afan tee to music, you could probably sniff out the blues in mississippi, but for the rest of us how far reaching into the delta is blues? how prevalent is that? >> reporter: listen, this goes to a lot of counties up in that area. particularly in the heart of it, up around clarksdale, up around tupelo, areas like that, there are many, many hard core places. but importantly, ali, one of the things they have done is make this a regional initiative. they have partnered with memphis, for example, so all the people who go to memphis to see
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graceland and all that, they hear about the delta and they're told go on down, check this out association many people do make it a whole trip. they'll go from memphis down to the delta, down to the coast, down to new orleans. lots and lots of europeans doing that trip. they're hoping that a lot more americans will start doing it too. i'm telling you, it's really worthwhile. >> love these trips that you do on the cnn express where you find out what people are doing. it's not just the same old, same old moaning and complaining. this is the tough part of my show. i have to say goodbye. normally we play that jingle but why don't you play us out as i say goodbye to my audience. >> i'll do the best i can. >> thanks a million. that wraps it up for this show. what a great way to end it. you can join our running conversation on facebook and twitter. make sure you join us every week saturdays at 1:00 p.m., sundays at 3:00. log on to cnn money.com d have yourselves a great weekend.

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